Impact of Pakistani Labor Migrant Network on Pakistan’s International Trade with the Middle East

Abstract

Emigrants possess knowledge of host and sending countries’ cultures and social environments that can help strengthen the economic relationship between them. We find this to be true for Pakistan and its selected Middle East trading partners for whom the data are available. Gravity model estimates suggest that each Pakistani emigrant contributed $422 to exports. This increase in exports can be attributed to Pakistani emigrants’ superior knowledge of both countries environment as well as their help in reducing transaction costs in trade. This study should be helpful to policy makers, who generally consider migrants to be the source of remittances only, while our study showed that migrants help broaden our international trade as well.

JEL Classification: F22, F22, F22, F24